Development Rights and Partial Interests

Development Rights and Partial Interests are more complex appraisal issues.  Federal Appraisal specializes in complex appraisal issues, such as these.

Partial Interest concepts begin with leases on fee simple property, creating leased fee and leasehold interests.  It is not uncommon in modern real estate for breakdowns in communication between unsure appraisers and clients. Such undisciplined practice by appraisers can lead to the appraisal of the wrong interests and inappropriate value conclusions.  Some lease deals are so complex and old that the implications of the lease are difficult to discern for all but the most experienced appraisers, such as those from Federal Appraisal.

Federal Appraisal LLC has appraised thousands of leased interests around the United States, from standard leases on general purpose commercial real estate to complex leases on very high value/complex facilities, such as corporate headquarters and campuses, power plants, and special manufacturing facilities.

  • Fee Simple, Leased Fee, Leasehold
  • Ground Leases
  • Long Term Leases
  • Lease Renewal Terms and Negotiations
  • Operating and Capital Leases
  • Leasehold Improvements

Partial Interest concepts continue with a divided interests in a fee estate, such as business partnerships and family limited partnerships.  Depending on the context, these partial interests do not represent their pro rata share of the fee value.  A 50% owner in an investment property does not have 50% of the value of the underlying investment property.  The appraisal is complex because first, Federal will establish the value of the underlying investment property.  Then, Federal will establish the discount to the pro rata share.  This discount study is a second appraisal, which has its own requirements depending on the users of the appraisal.  The IRS has very complex and distinct requirements from others such as bankruptcy courts or partnership dispute resolutions.

Federal Appraisal specializes in appraisal for accounting and legal purposes, such as discount studies for the IRS and litigation.

  • Partial Interest
  • Minority Interest
  • Discount for Lack of Marketability
  • Discount for Lack of Control

Development Rights are another type of partial interests.  Arising from general land development rights, development rights are the rights to develop that can be transferred to other landowners.  Development rights represent part of the land rights that are inherent in a full fee simple estate.  In urban areas, where land sales are rare and land values are very high, development rights present very difficult appraisal problems but often yield very high values.

Federal Appraisal has decades of experience appraising development rights.

  • Transferrable Development Rights
  • Air Rights
  • Floor Area Ratio FAR Square Feet